Today in thrift, we will be talking about multiplying your asset using the property as an investment tool. Specifically, using Hundred Palms Residences (one of the latest new launch in Singapore at Yio Chu Kang Road.) as a case study.
Multiplying Assets in Singapore
The beauty of the property is its ability to multiply your asset. To understand how wealth multiplication begins, we need to first understand the law of multiplication.
What does this mean to me? This means that if I hold on to my one property, I will always only have that 1 unit of wealth, whatever the value of that property may be. The rate of wealth growth will always remain at one. For example, if I had one property valued at $1 million, My rate of wealth growth will be $1 million ($1 million x 1). If I had 2 properties each valued at $1 million, my rate of wealth growth will automatically double to $2 million ($1 million x 2). When there is a doubling of assets, the multiplication of wealth begins.
Here is a real-life account: I had a client who owned a fully-paid up second property – a factory unit she purchased 10 years ago for $200,000. When I first met her, she told me she was very contented as her property gave her a monthly rental income of $2,500. She had no intention to sell as she felt “safe”. My advice to her was that although I agreed that her property was giving her a decent return, she was missing the bigger picture – the opportunity to multiply her wealth. At that time, the property price for her factory unit had gone up to $500,000.
This was above the past peak price. If she sold her property now, she stood to gain $300,000 in profit, and additionally, she would get back her initial $200,000 capital. With $500,000 cash-in-hand, she had the means to purchase another two units – effectively doubling her assets.
Conversely, if she chose to hold on to her current factory unit, it would take her 10 more years to accumulate $300,000 ($300,000 ± $2,500 = 120 months = 10 years), assuming she continues to receive $2,500 per month in rent for the next 10 years. (If the economy slows down, for example, rent could drop.) And even if she did receive $2,500 per month for another 10 years, she would still only have that one asset after another decade. What would you choose? Would you choose to:
- hold on to collect $2,500 per month and at the end of another 10 years have 1 asset? Or
- collect $500,000 cash-in-hand, and double your assets from one to two?
This is what a lot of people do not see. They become comfortable and satisfied with what they have. Or they are scared of the financial commitment of servicing a mortgage. They do not see how they are missing out on opportunities to multiply their wealth further. In the case of my client, she took my advice, upgraded her properties portfolio, and increased her passive income from rent from $2,500 to $6,000. That is an increase of 2.4 times passive income by just upgrading her portfolio! Plus, she multiplied her assets from owning 1-2 properties, (More on multiplying assets is discussed in Chapter 5 on Determining Exit Points.)
What is Systematic Growth?
Systematic growth means growth that involves steps, and there is a sequence of these steps.
Step 1: You start with one property. You watch the prices, and then you sell. You make a sum of money.
Step 2: You use the money that you made from that one property to make another purchase. If you can afford to purchase two properties, you purchase two. That is how you multiply your assets.
Step 3: You repeat Steps 1 and 2.
By following through with the steps, you will be able to see the results – your growth will be systematic, and not haphazard or loosely determined by “external” factors like market forces”. I have been experimenting with and testing my techniques for more than 8 years. In these eight years, I have experienced both highs and lows in the property cycle – and the techniques have withstood both price environments.
SYSTEMatic growth also means that growth continues. That is my objective of property savings. It is meant to be a continuous part of our lives. To achieve systematic growth there are two important functions: (1) Taking profit and (2) Multiplying assets.
If you already own properties, ask yourself if your current property savings strategy is performing these two functions consistently.
A property savings plan requires work and commitment and it is not going to be easy. It will involve you learning effective techniques on how to select the right properties to buy, how to spot undervalued properties, how to determine entry points, how to apply creative financing strategies, and how to protect your wealth. It will involve you being prudent, and smart about making the right choices.
Hundred Palms Residences EC
The developer for Hundred Palms Residences, Hoi Hup has secured a highly sought-after EC development as this is one of the rare ECs offered in the Hougang vicinity.
This upcoming Yio Chu Kang Road EC by Hoi Hup Realty is estimated to have more than 531 residential units at Hundred Palms Residences EC. 100 Palms Residences EC is due to preview around June or July 2017.
Plenty of Amenities at Hundred Palms EC
All homes will be equipped with luxurious designer appliances, a well-planned home awaits you. People who stay at Hundred Palms Yio Chu Kang Road can expect a comfort living in their home as there are plenty of amenities located in the development such as a 50m lap swimming pool.
Also, there are many other facilities available for the residents such as an indoor gym and an indoor air conditioned function room for the residents to conduct parties with the ease of 1 booking switch.
For sports lover, Hougang Stadium as well as Hougang swimming complex is located near to the development as well.
MRT Located Near Hundred Palms Residences EC
Hundred Palms Residences, Yio Chu Kang Road EC is located right in the heart of Hougang. Travelling to and from the city is very convenient as it is one of the few ECs that are located close to the city.
Hundred Palms Residences – Rare EC plot in Yio Chu Kang
The new Hundred Palms Residences EC land parcel attracted 10 hopeful bids with Hoi Hup Realty emerging winner with a top bid of $183.8 million. The land cost translates to a land cost per square foot per plot ratio(psf ppr) at $331.02 and an estimated Hundred Palms Residences EC price to be in the range of $750 psf to $800psf.
There will be 2 bedrooms to 5 bedroom units available. As noted by official sources, up to almost 3 quarters of the units available are the 3 bedroom units as it has a more affordable quantum and might not be too taxing for first-time buyers looking for their dream home.
The development by Hoi Hup Realty is one of the rare EC plots available in Singapore due to the fact that most ECs are located in non-mature areas. Hundred Palms EC is located in the mature estate of Yio Chu Kang Town which is just a few minutes drive away from Hougang MRT Station.
There are amenities near to the Hougang EC. Travelling to the city is also very convenient via Central Expressway(CTE).
Even though the property market has not been ideal for the past couple of years, the sheer number of bids for the plot of land indicate that developers are still upbeat about the EC market and in particular, the location of the EC and its proximity to the city.
Hundred Palms Residences by Hoi Hup Realty indeed is a serene hideaway for your family right in the heart of Hougang. You can check out the Hundred Palms Residences Official Site to find out more.